Steep cuts to the federal workforce are complicating an already complex retirement decision: Should you claim Social Security as soon as possible, or hold off to maximize your benefits?
There has never been a perfect answer, but the question has become more pressing due to sweeping changes in the federal workforce to comply with the Trump administration’s push to lower costs, led by Elon Musk and the Department of Government Efficiency.
The Social Security Administration plans to whittle its workforce to 50,000 from 57,000, mostly through voluntary separations and retirements.
Staffing was already at a 50-year low, according to former Commissioner Martin O’Malley, who has warned that further reductions could delay the delivery of benefits for the first time in the program’s nearly 90-year history.
Some Democrats and advocates fear the changes will gut the program that pays out benefits to around 69 million, or one in five, Americans.
O’Malley said he previously encouraged people to wait to claim benefits, but now it’s a “tough call,” he told Barron’s.
“I remain hopeful that given how much widespread bipartisan support there is for this essential program—essential to individual beneficiaries, essential to the American economy—Congress will stop Musk from dismantling and destroying the agency before it’s too late.”
Does that mean you should claim at your earliest eligibility to lock in benefits while you still can?
The short answer: is no. “I wouldn’t panic and collect,” says Jaime Eckels, a certified financial planner and partner at Plante Moran Financial Advisors in Auburn Hills, Mich.
However worrisome, processing delays wouldn’t lead to systemic collapse, says Jack Smalligan, a senior policy fellow at the Urban Institute who spent decades in the federal government, where he was responsible for oversight and analysis of Social Security programs.
“The program is strong enough that it can weather those disruptions if they happen,” he says.
There’s a big drawback to claiming early: It will lock in lower monthly benefits for life. The earliest age when you can claim benefits is 62, considered an “early retirement.
” For people born in 1960 and later, it results in benefits that are permanently reduced by 30% compared with what you’d receive at your full retirement age of 67. If you can wait until 70, delayed retirement credits will boost your benefit to 124% of what you’d receive at full retirement age.
This benefit structure is set by law. Only Congress has the authority to change benefit amounts.
Current recipients shouldn’t fear benefit cuts resulting from the current chaos at the agency, Smalligan says.
Lawmakers must act to shore up Social Security’s finances within the next decade, before the projected depletion of the retirement trust fund in 2033.
That could involve benefit cuts, but Congress will most likely exempt current retirees and those close to retirement, just like lawmakers did in 1983, the last time that sweeping changes were made to the benefit structure.
Still, if you’re planning to claim benefits in the coming months, don’t wait until the last minute—customer service or processing times could worsen due to staffing cuts.
The earliest you can apply for retirement benefits is four months before you want them to start.
“Given that we’re very likely to see processing delays, it’s probably a good idea to give the SSA as much of a lead time as possible,” says Mike Piper, a CPA in St. Louis and author of Social Security Made Simple.
Those applying for Social Security disability benefits are especially vulnerable to processing delays, Smalligan says, because their cases involve more review by staffers.
There is already a backlog in processing disability applications, and people have faced bankruptcies and health deterioration while waiting, Smalligan says.
The Social Security Administration didn’t respond to a request for comment on the possibility of benefit disruptions.
Some pre-retirees might find peace of mind claiming their benefits earlier than planned, given the upheaval at the Social Security Administration.
That’s OK, Eckels says, as long as you understand the financial ramifications and aren’t depending on delayed retirement credits to fund your lifestyle.
Spouses could split the difference, she adds, with one claiming early for peace of mind and income, and the other claiming later for the biggest check.
Lower-earning spouses who plan to claim spousal benefits don’t gain anything from waiting until age 70—your maximum spouse’s benefit is 50% of your partner’s benefit at full retirement age.
“My advice is, you need to do what is right for you,” Eckels says.
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